China may ask PM for FTA on his Beijing visit

NEW DELHI: China is expected to step up pressure on India to negotiate a bilateral free trade agreement (FTA) during Prime Minister Manmohan Singh’s visit to Beijing later this month. The trade and economic relations committee (TERC) headed by the PM will meet soon to finalise India’s agenda for the three-day visit beginning January 13. While India may not agree on FTA negotiations before China gets market economy status, it will try to convince Beijing to lower barriers to trade, mostly non-tariff in nature, for products such as coke and agricultural items.

The joint task force, set up to look into the possibility of an FTA, is expected to hand over its report during Mr Singh’s visit. According to sources, the joint task force will not rule out an FTA, but defer it. “India will not like to completely rule out an FTA as it might hurt its relations with China. However, it will certainly be deferred,” a source said.

India has not yet granted market economy status to China as it fears the move may result in large-scale dumping of Chinese products. Once the status is granted, India will compulsorily have to accept numbers supplied by China in all anti-dumping cases initiated by it against the country.

Since the Chinese pricing and accounting systems are still opaque, accepting their prices for anti-dumping calculations could result in a situation where India will not be able to establish dumping at all. This will prevent India from taking action against dumping of Chinese goods.

During Mr Singh’s visit, India plans to ask China to remove the export duty on coke as it was affecting India’s steel industry, which prefers to use high-quality coke from China. The country will also urge Beijing to remove restrictions on import of most agriculture products from India.

According to statistics released by China, India’s trade with the country touched $14.7 billion in the first five months of 2007 –– registering a 50% growth over the previous year. Bilateral trade is expected to cross $35 billion by the year-end.